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Analysts Weigh In on Governor’s January Budget Proposal

January 29, 2018

Various analysts are sizing up the impact of the Governor’s January Budget Proposal on K-12 education. Here are some highlights:

The California Legislative Analyst’s Office (LAO) offered the following executive summary on January 12:

Governor Prioritizes Reserves. The Governor’s 2018-19 proposed budget places a high priority on building reserves. To that end, the Governor proposes a total reserve balance of nearly $16 billion, including an optional $3.5 billion deposit into the state’s rainy day fund. We believe the Governor’s continued focus on building more reserves is prudent in light of economic and federal budget uncertainty. In considering the Governor’s proposal, we advise the Legislature to first set its own optimal level of reserves in preparation for a future recession.

Governor Allocates Funding Increases for Schools and Community Colleges. Under the administration’s estimates, there are sizeable resources available to allocate within the constitutionally required funding guarantee for schools and community colleges. The Governor makes a few major decisions in allocating these funding amounts. These include: (1) fully funding the implementation of the K-12 Local Control Funding Formula, (2) increasing community college apportionments and implementing a new allocation formula, and (3) creating a new high school career technical education program.

Governor Makes Various Infrastructure Proposals. After setting aside reserves and fulfilling constitutionally required spending, the Governor uses some discretionary funds for a variety of new infrastructure projects. While these proposals have merit, the Legislature may wish to consider whether it has a different set of priorities for infrastructure spending. Moreover, while many of the infrastructure proposals in the Governor’s budget include relatively small spending amounts for 2018‑19, some carry growing and significant costs in later years.

More Resources May Be Available in May. The Legislature may have more resources available to allocate in May for two reasons. First, the administration’s revenue estimates may be higher. Second, the Congress may authorize a higher federal cost share for the Children’s Health Insurance Program, resulting in General Fund savings.

To read the LAO’s full overview, click on the link below:

http://lao.ca.gov/Publications/Report/3731

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The Association of California School Administrators published the following analysis on January 10:

Gov. Jerry Brown has released his anuary Budget Proposal for the 2018-19 fiscal year. During his news onference, Brown emphasized his long-standing philosophy that education is a local matter and making progress on student achievement will not be solved in acramento but rather in the classroom.

His remarks focused on the theme of aintaining “fiscal prudence” and encouraged the Legislature to begin budget conversations with “precaution” since the state’s progressive tax system ignificantly relies on taxing the high-income earners. This is particularly relevant in light of the recent federal tax reform bill signed by President Trump in late December 2017, as California policymakers determine what the fiscal impact will be to the state. As a result, there is a heightened uncertainty and unpredictability of our volatile revenue system.

It is no surprise that the California Legislature and the governor will direct their attention to the national political landscape, as there are several policies with significant fiscal implications that could negatively impact the state. These include an impending threat to repeal the Affordable Care Act that could cost the state more than $20 billion in federal subsidies and result in an estimated loss of 334,000 jobs, as well as changes to immigration, trade and climate change policies that could disrupt communities throughout California.

Below is ACSA’s initial review of the governor’s January budget proposal. A full analysis will be provided in the coming days as additional details become available.

K-12 Education Funding Overview

Gov. Brown’s budget proposes a General Fund budget plan of $131.6 billion, a 4.1 percent increase from the current fiscal year. As a result, this year’s investments in K-12 public education are comparable to the year-over-year augmentations schools have received since the November 2016 passage of Proposition 55, the temporary income taxes. The budget proposes to fund the Proposition 98 minimum guarantee at $78.3 billion, a $3.1 billion increase compared to the 2017-18 funding levels. This results in an average increase of $465 per-pupil over the level provided in the 2017-18 budget.

More specifically, the administration includes the following proposals:

As part of the $78.3 billion provided through the Proposition 98 minimum guarantee, the budget includes the following proposal for public education:

  1. Local Control Funding Formula: Nearly $3 billion to fully fund 100% of the formula targets two years ahead of schedule. However, as a trade-off the budget proposes requiring local educational agencies to show how their budget expenditures align with the strategies detailed in the Local Control and Accountability Plans for serving students generating supplemental grants.
  2. One-Time Discretionary Funding: $1.8 billion in one-time discretionary block grants allocated on a per-pupil basis equivalent to $295 per ADA, and as in years past, funding will offset any outstanding mandate reimbursement claims.
  3. System of Support: The budget provides a $70 million investment in ongoing Proposition 98 funds to further implement the state system of support. Of this amount, $55.2 million would go towards county offices of education to assist in the improvement of school districts identified for differentiated support, and $11.3 million to continue funding the California Collaborative for Educational Excellence.
  4. Special Education: In response to the 2015 recommendations of the California Statewide Special Education Task Force and the recent report by the Public Policy Institute of California and building upon last year’s discussions with stakeholders, the administration proposes requiring SELPAs to complete a SELPA local plan template that aligns services and resources noted in their local plans with the goals identified in their members district’s LCAPs. Most notably, $167 million would be dedicated to increase the availability of inclusive early education and care for children aged 0 to 5 years old. A $10 million ongoing Proposition 98 allocation would also be made for SELPAs to work with county offices of education to provide technical assistance to local educational agencies to improve student outcomes as part of the system of support.
  5. Teacher Shortage: The administration proposes $100 million in one-time Proposition 98 funds to increase and retain special education teachers, with half of the funding earmarked for a Teacher Residency Program aimed at preparing and retaining special education teachers, and the other half dedicated to one-time competitive grants to local educational agencies developing or implementing new or existing locally identified solutions that address a local need for special education teachers.
  6. Career Technical Education: While the funding for the CTE Incentive Grant Program expired at the end of 2017-18, and the Department of Finance had shown no interest in re-establishing a dedicated funding stream for such programs, the administration proposes an ongoing increase of $200 million Proposition 98 funds to establish a K-12 specific component of the Strong Workforce Program to encourage the establishment and support for K-12 CTE programs that are aligned with needed industry skills. An additional $12 million in ongoing Proposition 98 funds would fund local industry experts who would provide technical support to local educational agencies operating, or proposing to operate, CTE programs.
  7. K-12 School Facilities: As a result of the passage of Proposition 51 in November 2016 to authorize $7 billion in state general obligation bonds for K-12 schools, the budget proposes approximately $640 million in bond authority for 2018-19 to fund new construction, modernization, CTE and charter facility projects.
  8. Cost-of-Living-Adjustments: The proposed budget includes an increase of $133.5 million in Proposition 98 funds to support a 2.51 percent COLA for the categorical programs that remain outside of LCFF, including special education, child nutrition, foster youth, American Indian Education Centers, and the American Indian Early Childhood Education Program.

As a major education stakeholder, ACSA will be actively engaged in the budget discussions with the administration to ensure our best interests are upheld. Throughout this legislative season, ACSA will keep you apprised of all budget negotiation discussions until the budget is completed by the June 15 constitutional deadline.

The full budget can be found at http://www.ebudget.ca.gov/FullBudgetSummary.pdf

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The Education Trust–West, an Oakland-based advocacy group, said on January 11:

The Governor’s proposed budget for 2018-19 includes funding increases for both the K-12 and higher education systems, including a number of proposals that could be leveraged to better support students of color and low-income students.

K-12 Education

“The Education Trust–West thanks Governor Brown for proposing a 2018-19 state budget that includes $78.3 billion in Prop 98 K-14 education funding and an increase of $3 billion for the Local Control Funding Formula (LCFF), bringing the funding formula to full implementation ahead of schedule. We applaud the Governor for acknowledging that parents, advocates, and other stakeholders need more information about how LCFF funds are spent. We look forward to seeing the details regarding how this additional transparency will be achieved and how it will go beyond the limited reporting already available – including how it will show school-level spending.

We are pleased to see that Governor Brown included $70.5 million for the K-12 system of supports, providing crucial resources to help districts improve. Moving forward, we will continue to call on state policymakers to provide more clarity on how this system of supports will accelerate the closing of gaps for students of color and low-income students and how parents, community partners, and other local stakeholders will be included in the process. We also call on the state to create stronger alignment between the supports offered to struggling school districts and the supports offered to the lowest performing schools.

Higher Education

We are excited by Governor Brown’s proposal to use an equitable student funding formula for the California Community College system and we’re happy to see that the proposal couples its focus on student outcomes with resources for institutions that will support low-income student success. More funding does not automatically improve outcomes for underserved students, but evidence shows utilizing additional funding on services for those students can have a dramatic impact. As the proposal develops, we hope to see a focus on spending the additional funds directly on programs and practices that support the students generating the additional funds. The Education Trust-West stands ready to support Chancellor Oakley as he consults stakeholders to further develop this proposal for the May Revise.

The proposal to fund the implementation of the California College Promise, regarding community college access and services, is another place to ensure equity is prioritized in leveraging new funding for support programs, partnerships, and services. Fees are not the biggest challenge for low-income students since they are already eligible for fee waivers and by embracing the flexibility within the College Promise, community colleges can utilize funds for other equitable programs and services. Similarly, the online community college proposal holds great potential and we will be watching the development of the project. We urge the Governor and the Legislature to be sure the college meets high standards for educational quality and that low-income students have equitable access to all of the necessary technology so that opportunity gaps are not exacerbated.

We are glad to see these efforts to prioritize equity in the state budget proposal and we will continue to engage with policymakers and stakeholders on the details of these initiatives as the budget process moves forward.”

  1. shape in the Legislature. The Legislature also develops and passes “trailer bills,” which direct the budget’s implementation. The Legislature must adopt the final budget by June 15th.
  2. Finally, the Governor signs the budget, and has the discretion to reduce or eliminate any expenditure by line-item veto.

Governor’s Proposed 2018-19 (January) Budget At A Glance

K-12 Education

  1. LCFF: The Governor proposes an additional $3 billion to fully implement the formula.
  2. Transparency: The Governor proposes requiring local educational agencies to show how their budget expenditures align with strategies detailed in their Local Control and Accountability Plans for serving students generating supplemental grants. The Governor also proposes calculating and reporting on a single website the total amount of supplemental and concentration funding provided to each local educational agency.
  3. System of Support: The Governor proposes an increase of $59.2 million for county offices of education to provide technical assistance to local educational agencies and improve student outcomes. The Governor also proposes $11.3 million to fund the California Collaborative for Educational Excellence. Total funding proposed to be provided for supports to local educational agencies is approximately $70.5 million.
  4. One-Time Discretionary Funding: The Governor proposes $1.8 billion in one-time funds to school districts, charter schools, and county offices of education to be used at local discretion. All of the funds provided will offset any applicable mandate reimbursement claims for these entities.
  5. Special Education Teachers: The Governor proposes an additional $100 million investment to increase and retain special education teachers through a teacher residency grant program and a grant program to support locally identified solutions.

Higher Education

  1. California College Promise (AB 19): The Governor proposes $46 million to support the implementation of the California College Promise (AB 19).
  2. Online Community College: The Governor proposes $120 million ($20 million ongoing) to establish a fully online community college.
  3. CCC Student-Focused Formula: The Governor proposes $175 million to support community college districts’ transition to a student-focused funding formula.
  4. Cal Grant Awards for Private Non-Profit / For-Profit Institutions: The Governor proposes that private non-profit institutions accredited by the Western Association of Schools and Colleges (WASC) maintain their Cal Grant awards at $9,084 annually, with a new requirement that, beginning in 2019-20, the sector admits at least 2,500 students who have earned Associate Degrees for Transfer from the community colleges and are assured junior standing. Pursuant to existing law, Cal Grant awards for WASC-accredited private for-profit institutions are scheduled to decrease to $8,056 beginning in 2018-19.

UC and CSU Proposed Fee Increases: Both the UC and the CSU are considering tuition increases for 2018-19. The UC Office of the President has suggested that it will present a 2.5-percent ($288) tuition increase to the Board of Regents later in January. The CSU Chancellor’s Office has indicated that a 4-percent tuition increase ($228) is under consideration for presentation to the Board of Trustees.

Sources:  California Legislative Analyst’s Office, Association of California School Administrators, Education Trust–West.



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